State deregulation contracts may boost energy cost to poor

FORT WORTH (AP)  Some of the state's poorest residents would pay more for electricity than would more affluent customers when deregulation begins next year, under contracts approved by regulators.

Although rates for such customers would be lower than those now charged by TXU, for example, they generally would not match the rate cut promised under the state's electric deregulation law, according to the contracts approved Friday.

The deals with Houston's Reliant Energy and Ohio-based American Electric Power would bring so-called provider of last resort service, or POLR, to customers in Tarrant, Dallas and about 90 other Texas counties.

Under the state's deregulation law, customers receive last resort service if their regular electric company cuts them off for nonpayment of bills or for other reasons. The law reduces rates for other customers who remain with their traditional utility after deregulation begins Jan. 1.

Under Reliant's deal in Fort Worth, for example, the company said a typical last resort customer will pay at least 5 percent more than would a customer that sticks with TXU.

"The commission never intended the POLR to be a competitive service," David Hennekes, POLR operations director for Reliant, said in Saturday's editions of the Fort Worth Star-Telegram.

"By design, it's a temporary safety net," Hennekes said. "And because many of the customers are a higher credit risk, the cost to serve those customers is higher."

But consumer advocates have been critical of the POLR deals, saying they gouge the poor.

"That contract is still too much," said Carol Biedrzycki, executive director of the Texas Ratepayers Organization to Save Energy. "No one should have to pay more, especially poor people who can't afford to pay bills in the first place."

The Texas Public Utility Commission estimated that a typical bill for a customer receiving POLR service in Fort Worth would be $111.20 per month, although amounts would vary with usage.

In Dallas, a typical POLR bill would be $107.50 a month under a separate contract with American Electric Power, the PUC said. The commission has not yet calculated corresponding rates for non-POLR customers who stick with TXU.

PUC staff and TXU officials also agreed to a revised POLR deal for Houston. TXU earlier received the contract for Houston's POLR service but at rates about 50 percent higher than those currently charged.